Europe

The European construction industry will see a restrained recovery in 2026. GDP growth is estimated to be 1.5% to 2.7% in 2026. Some countries such as Poland, Ireland, Spain and Hungary are performing rather well as we transition into 2026.  The (4) big European countries, France, Germany, Italy and the UK construction sectors are still struggling to experience growth, it could be another 6 to 12 months before these changes. The main issues for these counties are the ongoing war between Russia and Ukraine and the increasing number of immigrants entering each country.

An uninspiring economic situation does not motivate major & mid-sized companies, contractors & vendors to spend / invest funds on expansion plans. The best strategy is to wait it out & hope that the economic situation improve, until the Russia vs. Ukraine conflict is resolved it is difficult to see a change in the current situation.

Construction activity in the UK, is seeing a minor improvement especially in the London area, in office / admin type construction, together with some roadworks, rail upgrades, power (nuclear type facilities), docks / jetty refurbishments & warehouse / logistics facilities as we move into 2026. 

The UK Government has recently announced plans to engineer & build a new nuclear power plant in Sizewell Suffolk, in eastern England & in north Wales that will cost between $15 & $20 billion. These power plants will generate more than 3 GW of electrical power & will utilize the design of the ongoing Hinkley Point C nuclear power plant located in Somerset in southern England that is current being built & is approximately 40% complete & employ more than 25,000 people.  This is a huge shot in the arm for the UK construction sector that has been struggling for the best part of 3 years.

The German construction industry continues to be in a decline, that has gone on for close to 5 years, lackluster demand, high interest rates & the ongoing struggle between Russia & Ukraine are the issues overshadowing the German construction sector. Germany continues to be the major economy in the EU. Economic activity in Germany is expected to increase by1.5% to 3.5% in 2026. Germany still has a long recovery journey ahead. The hope is that the newly elected Chancellor Metz will perk up the economy & construction sector in the next 3 to 6 months. Germany’s construction market is estimated to be $350 to $400 billion in 2026.

The French construction sector continues to be somewhat downcast, as it has since COVID, more than 4 years back. High unemployment especially in the construction sector (currently in the 8% to 11% range which is very high), restrained demand, high interest rates & the ongoing conflict between Russia & Ukraine are the issues impacting the French construction sector.  The Latest feedback from France is that the Construction Industry should see a small uptick in construction activity in 2026. France’s leadership in safe & sustained nuclear energy / engineering & construction knowledge plays a crucial role in Europe’s calling for clean energy & zero carbon emissions. The French construction industry is projected to grow by 2.7% to 3% from 2025 levels, the French construction market is valued at $300 to $325 billion.

The Italian construction industry is experiencing a modest uptick in construction activity, still a long way to go to recapture its status / standing it had a decade back. The big news is the approval of 2.2 miles Strait of Messina Suspension Bridge, a $15 + billion connecting the island of Sicily to the Italian mainland.

The value of the Euro has been progressively declining against the US dollar for the best part of 3 years, some economists are projecting that the Euro could fall to between 0.80 and 0.85 to the US dollar in the next 12 months. This, of course, will impact inflation in Europe and could be the catalyst to increase construction related materials costs.

The European Union (27 countries) will continue to experience minimal construction related growth, with a low GDP growth rate of 1.2% & 1.7%, inflation at 1.5% to 1.9% and a reasonably high construction unemployment rate of 6.4% to 7.1% as we move deeper into 2026. A couple of countries such as Poland, Portugal, Norway and the Netherlands are starting to see increased opportunities, but for the most part the rest of Europe will see slow growth in 2026 as the economic consequences from the war in Ukraine grinds on.